Cutting Off Your Nose To Spite Your Face


When Teabaggers talk about the high price of public employees, I wonder if this is who they mean?

Ginny Townsend, 41, took a job in January as a nursing assistant in the state-run home for veterans here. Technically, she works for a private company that supplies some employees to the veterans home under a [Michigan] state contract. She makes $10 an hour, about half the wage of the public employees working at the facility.

“I love my job, and I appreciate the opportunity to be here,” Ms. Townsend, a former home health care aide, said on a recent afternoon as she cheerfully delivered fruit and a newspaper to an 85-year-old resident in a sun-drenched solarium.

With the national unemployment rate at roughly 9 percent, Ms. Townsend says she feels lucky just to have a job. But on her low wages, she is barely scraping by. She said she was raising four grandchildren under 11 with her unemployed sister and could not support them without the $300 in food stamps she collects every month.

Do a little math here: $10 an hour works out to less than $23,000 a year, so $20 an hour works out to a little over $45,000 a year. Undoubtedly, with benefits and insurance costs, and of course profit, her employer is being paid about $20 an hour for each full-time equivalent (not all employees would work a full time shift). The average private care worker in Michigan is paid $12.25 per hour.

On top of this, she takes down $300 in food assistance each month or $3,600.

In other words, the state pays $55,000 or so for a $50,000 employee. OK, the state incurs other expenditures like pension contributions and other benefits mandated by collective bargaining, but the differential is clearly not as grand as Teabaggers would have you believe. call it $55,000 for a private contractor's employee versus $60,000 for a public worker.

But Townsend's case highlights the real danger in offsourcing jobs to contractors: Contractors are going to hire the cheapest, underpaid workers, which means they will hire less qualified workers, since even average workers will earn $12.25 per hour, which means that the quality of care will diminish while also draining state resources in other ways (unemployment benefits, food assistance, and so on.)

The savings, in other words, is minimal at best and likely a real waste of state resources.

This is not to say that the state should never outsource work. There are some jobs the private sector will do better than the public sector, and if the area is non-critical, it seems to be those are areas where outsourcing might commence. But no one wants to see the public security and health risked for a false profit.


Actor 212 November 7, 2011 - 10:14am

"But no one wants to see the public security and health risked for a false profit."

The profit the contractor makes is very real. Neither he nor the Teabaggers nor the politicians give a damn about public security or health.


"When you live on cash, you understand the limits of the world around which you navigate each day.
Credit leads into a desert with invisible boundaries."
- Anton Chekhov

steeleweed November 7, 2011 - 11:08am

I recall reading somewhere that in those countries the GOP would consider 'socialist', the total per captia outlay for health & pension is about the same as here. The difference is that there it's singlepayer or regulated health/pension benefits and covers everyone. Here, it's part public, part private, some are not covered and it's very inefficient.

Roughly the same amount is spent under both systems but in Europe it works well and in the USA we do it wrong. Dollar for dollar, Europeans get more for their money than we do and cover everyone well. We spend as much and cover some well, some are not covered and we waste a lot on making insurance companies and big pharma rich.


"When you live on cash, you understand the limits of the world around which you navigate each day.
Credit leads into a desert with invisible boundaries."
- Anton Chekhov

steeleweed November 7, 2011 - 11:52am

that come with these sorts of decisions. When you hire contractors or are constantly shifting employees through a job mill, what does that do to the quality of care? When that quality falls, what are the greater unseen costs to society? Like outsourcing and privatizing schools, we are so obsessed with the dollars and cents that we completely gloss over the resulting dullards and sense (or lack thereof). After all, if kids don't receive a better education or gain some sort of useful skill, what is the point of saving money on education?

Also, this reminds me of companies that outsource critical work because it saves money on paper. At least two corporations I've worked for in the past have tried outsourcing their IT to contractors, only to pull it back in house a few years later. The contractors: are not onsite, don't really give a s*&^ whether you are working or not (they are paid to but they don't have actual skin in the game), and are ill equipped to handle large emergencies quickly. The craziest part is the cost of this crap is always double; you have to switch to a contractor system (lay off your in house IT, give them severance, etc), then you have to rehire all those jobs once it fails and you switch back.

As Steeleweed writes, they really just don't give a damn as long as today's money lands in their pockets.

zot23 November 7, 2011 - 12:11pm

More and more we are proving the old adage about knowing the cost (price) of everything and the value of nothing. Tea baggers think it is better that the Koch Bros have a tax break to buy another Lear while their kids teachers and schools go to hell in a handbasket.

Zman1527 November 7, 2011 - 1:34pm

my blue collar job was outsourced Nov. 09. I could have gone to work for them but would have lost my health care so I took the package that was offered to go away. The person that replaced doesn't have my full background but he is good. I made 66500 plus bonus and he makes 24000 and has to pay for 50% of his health care. It's just another way to crush the middle class/Main Street.

jo6pac November 7, 2011 - 9:01pm

the government has to hire one or two people to constantly monitor the work and compliance with the terms of the contract for almost every little contract. Plus the work of offering/announcing contract work and soliciting/evaluating bids every year or two. That's on top of the bureaucracy at the contracting firm, which in my experience has been much more inefficient than management in government agencies.

Then what you are left with is a government that has fewer low level employees (because they've all been outsourced) and more midlevel managers, with the result that government looks more overpaid and top heavy while services are shoddier. Thus re-enforcing the statistics and stereotypes that government workers are highly paid/over paid, which somehow get used to justify ever more outsourcing to private companies.

And that's a best case scenario. When the monitoring staff get spread too thin, or competition for contracts is weak or nonexistent, or there are cozy arrangements between contractors and politicians, figure in the cost of graft and corruption. Welcome to New Sicily.

maqmigh November 8, 2011 - 2:25am

actually costs more than inhouse work, but that seems to be for professional services. The basic point is that a comparison of wages is not really about costs. For the government, the purely financial issue is the amount the private contractor bills.

But I don't agree with a purely financial approach. A decent society pays decent wages and provides decent benefits, and that's what the government ought to do. And the tea partiers ought to be backed down on this.

nihil obstet November 8, 2011 - 5:49pm

Cost effectiveness is just a lie made up as a fig leaf to justify giving private contractors more access to public cash.
Often when worked gets contracted out, the government workers get shifted over to the contractors so that the same people (at least at first) are doing the exact same work. But instead of having a manager, and a section chief etc chain of command, there is a new layer of bureaucracy added between the govt and the company, and then their is the contractor's overhead on top of that.
Lots of times they do cost effectiveness studies before deciding whether to privatize, and even when the studies (which are usually slanted with assumptions in favor on privatization) say it's a bad idea, they go ahead because they never gave a fuck about cost or effectiveness to begin with (much less larger social goods like middle class income security)

maqmigh November 9, 2011 - 2:42am

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